Following in the footsteps of infrastructure peers, NCC Ltd has decided to shun build-own-transfer (BOT) projects and instead bid for engineering, procurement and construction (EPC) ones.
“We have taken a conscious decision not to bid for BOTs. We will, however, bid for cash contracts,” Y D Murthy, NCC’s executive vice-president, told analysts during a conference call on Friday. The company has already started the process of monetising its existing BOT road projects, he said, but did not disclose details.
It has also started monetising its real estate assets. It closed a deal worth Rs100 crore and received about Rs55 crore of the deal value last quarter. The balance is expected to accrue to the books next quarter.
NCC currently has five road projects – Brindavan Infrastructure (Bengaluru-Maddur, Karnataka), Bangalore Elevated Tollway, OB Infra (Orai-Bhognipur, Odisha), Western UP Tollway (Meerut-Mujaffarnagar, UP) and Pondicherry-Tindivanam (Tamil Nadu).
Of these, Brindavan Infra and OB Infra are annuity projects, while the rest are toll-based. The projects had a combined revenue of Rs326 crore and a profit of Rs2.58 crore last quarter.
But monetisation is easier said than done in the current situation, Murthy conceded. “Though we have decided to sell the road projects, the progress on this front is not very encouraging. We hope to sell one road project by March 2013. There are more sellers than buyers in the market and valuation is an issue. In fact, there are not many deals happening.”
The company plans to use the proceeds of the monetisation process to discharge its debts. It is currently carrying a debt of about Rs2,500 crore on its books.
For the quarter ended December, the company recorded a revenue of about Rs1,232 crore as against `1,303 crore in the corresponding period the previous year. It reported an Ebitda of `85.76 crore for the quarter as against Rs77.41 crore in the corresponding period a year ago and a net profit of about `10.82 crore as against a loss of about `9.48 crore.
For the full year, the company is confident of registering a year-on-year growth of about 15%.
“For 3QFY2013, NCC posted poor performance on the revenue front; however lower interest and tax expense help boost the bottom line growth,” Viral Shah, senior research analyst - infrastructure, Angel Broking, said in a note.